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USF&G CORPORATION REPORTS 1993 THIRD QUARTER PROFIT; CORE PROPERTY/CASUALTY OPERATIONS CONTINUE TO STRENGTHEN

 BALTIMORE, Oct. 27 /PRNewswire/ -- USF&G Corporation (NYSE: FG) today reported consolidated net income of $20 million for the third quarter of 1993, compared with $5 million for the same period in 1992. For the first nine months of 1993, consolidated net income totaled $106 million, compared with $15 million for the same period in 1992. After accounting for preferred stock dividends, these results equate to third quarter and first nine-month net income of 10 cents and 83 cents per common share, respectively, compared with net losses of 9 cents and 25 cents per common share for the same periods last year.
 Consolidated third quarter 1993 net income prior to realized gains and losses was also $20 million, or 10 cents per common share, compared with a loss of $80 million, or $1.09 per common share for the third quarter of 1992. Third quarter 1992 results included the losses from Hurricane Andrew. For the first nine months of 1993, net income prior to realized gains and losses and the adoption of new accounting standards was $67 million, or 36 cents per common share, compared with a loss of $75 million, or $1.32 per common share for the same nine months of 1992.
 Norman P. Blake Jr., chairman, president and chief executive officer, said today: "The positive operating earnings of our core property/casualty company continue to outperform prior year trends. Our property/casualty insurance company's underwriting performance is improving steadily and is driving overall profitability despite the industry-wide impact of lowered investment income due to interest rate reductions and higher reinsurance costs due to the tight catastrophe reinsurance marketplace. The improvement in underwriting results is evidence of the success of our strategies to lower losses through rigorous product/market mix management and an upgrading of underwriting and claims expertise. It also includes the benefits of cost reduction initiatives begun in late 1990 that have resulted in a 34 percent improvement in productivity.
 All of our insurance product departments are pursuing aggressive growth strategies. Our ongoing efforts to reengineer work flow processes in our insurance businesses are resulting in improvements in both risk management and cost effectiveness."
 Additional Consolidated Data
 Net realized gains on investments for the first nine months of 1993 totaled $1 million, compared with $148 million for the same period last year. The 1992 realized gains more than offset losses from Hurricane Andrew and restructuring charges related to the strategic repositioning of field operations.
 Consolidated revenues for the first nine months of 1993 totaled $2.5 billion, compared with $2.9 billion for the same period in 1992. The revenue decline was attributable principally to planned management actions to reduce premium production in unprofitable markets and product lines. These actions have contributed to the improved property and casualty underwriting results.
 Assets were $14.6 billion as of Sept. 30, 1993, and stockholders' equity totaled $1.4 billion, or $9.84 per common share.
 Property/Casualty Insurance
 Property/casualty net income totaled $56 million for the third quarter of 1993, compared with $43 million for the third quarter in 1992. Property/casualty net income for the first nine months of 1993 totaled $176 million, compared with $135 million for the same period in 1992.
 Net income prior to realized gains and losses totaled $50 million for the third quarter of 1993, compared with a loss of $43 million for the same period in 1992. Net income prior to realized gains and losses and the adoption of new accounting standards for the first nine months of 1993 totaled $133 million, compared with $4 million for the same period in 1992.
 Property/casualty operating results improved $93 million over the comparable third quarter of last year. Blake stated: "There is no doubt that losses from Hurricane Andrew skew current quarter comparisons with the 1992 third quarter results, as evidenced by the combined ratio improvement from 124.6 to 108.6. If the 12-point impact of the hurricane is deducted, however, we are still experiencing a four-point improvement in the combined ratio -- evidence of our drive to underwriting profitability."
 Life Insurance
 Life insurance net income for the third quarter of 1993 totaled $1 million, compared with a net loss of $4 million for the same 1992 period. Net income for the first nine months of 1993 totaled $9 million, compared with a loss of $1 million for the same period in 1992. Blake stated: "The positive results of redesigned products and a targeted distribution strategy have resulted in a 144 percent increase in new business volume over third quarter 1992. In addition, the operating expense to revenue ratio has declined from 9.3 percent to 5.0 percent as a result of significantly lowered structural costs and process reengineering." Prior to realized gains and losses, life operations lost $4 million in the third quarter of 1993, compared with a loss of $6 million for the same period of 1992.
 For the nine month period, prior to realized gains and losses and the adoption of new accounting standards, the Life business lost $4 million in 1993 and $3 million in 1992.
 Parent and Noninsurance Operations
 Noninsurance operating performance coupled with interest and unallocated expenses generated a net loss of $37 million in the third quarter of 1993, compared with a net loss of $34 million for the same 1992 period. Third quarter 1993 interest and unallocated expenses totaled $19 million and noninsurance operations had a loss of $18 million. Nine month 1993 interest and unallocated expense totaled $56 million and noninsurance operations had a loss of $23 million.
 Baltimore-based USF&G Corporation, with assets of $14.6 billion, is one of the nation's largest property/casualty insurers. The corporation's principal subsidiary is United States Fidelity and Guaranty Company (USF&G Insurance), founded in 1896.
 USF&G CORPORATION
 Condensed Consolidated Statement of Operations
 (Unaudited--dollars in millions except per share data)
 Three Months Ended Nine Months Ended
 Sept. 30 Sept. 30
 1993 1992 1993 1992
 REVENUES:
 Premiums earned $562 $ 657 $1,856 $2,035
 Net investment income 184 197 565 627
 Other 9 15 28 48
 Revenues before
 realized gains 755 869 2,449 2,710
 Realized gains on
 investments -- 142 1 148
 Total revenues 755 1,011 2,450 2,858
 EXPENSES:
 Losses, loss expenses
 and policy benefits 498 679 1,625 1,941
 Underwriting, acquisition
 and operating expenses 229 260 728 812
 Interest expense 10 10 31 31
 Restructuring charges -- 51 -- 51
 Total expenses 737 1,000 2,384 2,835
 Pretax income from
 continuing operations 18 11 66 23
 Provision for income
 taxes (benefit) (2) -- (2) 1
 Income from continuing
 operations before cumulative
 effect of accounting changes 20 11 68 22
 Loss from discontinued
 operations -- (6) -- (7)
 Income (loss) from cumulative
 effect of accounting changes:
 Income taxes -- -- 90 --
 Postretirement benefits -- -- (52) --
 Net income $ 20 $ 5 $ 106 $ 15
 EARNINGS PER COMMON SHARE(A)
 Income from continuing operations
 before cumulative effect of
 accounting changes $.10 $(.02) $ .38 $ (.17)
 Loss from discontinued
 operations -- (.07) -- (.08)
 Income (loss) from cumulative
 effect of accounting changes:
 Income taxes -- -- 1.06 --
 Postretirement benefits -- -- (.61) --
 Net income $.10 $(.09) $ .83 $ (.25)
 Weighted average common
 shares outstanding (000s) 84,898 84,377 84,713 84,310
 (A) Earnings per common share amounts are based on income after deduction of preferred stock dividends.
 -0- 10/27/93
 /CONTACT: Kerrie Burch-DeLuca of USF&G Corporation, 410-547-3573/
 (FG)


CO: USF&G Corporation ST: Maryland IN: INS FIN SU: ERN

DT-DC -- DC009 -- 7205 10/27/93 10:55 EDT
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Publication:PR Newswire
Date:Oct 27, 1993
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